PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
7th Edition
ISBN: 9780357033647
Author: Billingsley
Publisher: CENGAGE L
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Chapter 2, Problem 5FPE
a)
Summary Introduction
To reconcile: The differences in given situation
b)
Summary Introduction
To reconcile: The differences in given situation
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Sarah Geronimo and Matteo Guidicelli are preparing their 2021 cash budget. Help the Guidicelli couple reconcile the following differences, giving reasons to support your answers.
Their only source of income is Matteo’s salary, which amounts to $5,000 a month before taxes. Sarah wants to show the $5,000 as their monthly income, whereas Matteo argues that his take-home pay of $3,917 is the correct value to show.
Sarah wants to make a provision for fun money, an idea that Matteo cannot understand. He asks, “Why do we need fun money when everything is provided for in the budget?”
Carl is a student at a college. He has a part-time job with take-home pay of $525 every two weeks. He has received a scholarship of $4100 this year. a) Use the data provided to design a monthly budget for Carl. Show your calculations for his income and expenses. Identify each expense as fixed or variable.
b) Is Carl earning enough to cover his expenses? If not, suggest how he could balance the budget
1. Evan wants to start using a budget to curb spending and begin saving money. His estimates on income
and spending are recorded in the table below. How much can Evan spend on his credit card to maintain
a positive cash flow of $100/month?
Use 4 weeks = 1 month even though this is generally not true.
Expenses
Rent $700/month
Groceries $45/week
Tuition and fees $6500/year
Credit card ? (covers games, streaming and dining out)
Phone $60/month
Income
Part-time job $1200/month
Loan $2500 twice a year
Scholarship $3000/year
Transportation $200/month
2. Tamara likes getting breakfast tacos (two) and coffee (large) at the restaurant down the street and
spends $6 on Tuesday, Thursday, and Saturday mornings for the pleasure.
(a) How much is she spending each year on breakfast tacos and coffee?
(b) Do some research to estimate how much money she would save each year by making the tacos
and coffee at home. Answers for this will vary. Be clear about how you arrived at your estimate.
deposits
How
Chapter 2 Solutions
PFIN 7:STUDENT EDITION-MINDTAP (1 TERM)
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Trevor and Kristen Hill need to prepare a cash budget for the next three months to make sure that they can cover their expenditures during the period. Trevor and Kristen have tracked their finances for the past few years using an app, and thus know what percentage of their take-home pay of $5500 goes for various expenses. Expenses Housing Utilities Food Transportation Medical/dental Contributions Clothing (3% normally; $450 in Month 3) Property Taxes ($1260, Month 2 only) Appliances Personal Care Travel and Entertainment (6%; $1400 in Month 3) Other Savings 29.0% 5.0% 9.5% 6.0% 5.0% 10.5% 3.0% a. 1.0% 2.0% 6.0% 5.0% 7.5% The Hills must maintain a $1500 cash balance to avoid checking fees; however, the balance on March 31, 2021 was $1300. Their savings account balance on March 31 was $20,000. Prepare a quarterly cash budget for Trevor and Kristen for the next three months. b. Using your calculations, show the monthly inflows and outflows and the end-of-month balances for the Hills…arrow_forwardLeyia and Larry Hartley of Columbus, Ohio have decided to start a family next year, so they are looking over their budget. Leyia thinks that she can go on half-salary ($2,400 instead of $4,800 per month) in her job as a college textbook sales representative for about 18 months after the baby's birth; she will then return to full-time work. Looking at the Hartley's current monthly budget, identify categories and amounts in their budget where they realistically might cut back $2,400. (Hint: Federal and state taxes should drop about $600 a month ($7,200 annually) as their income drops.)arrow_forwardMrs. Collins wants to start a clothing business. He plans to invest Gh₵ 30,000 of his savings into the new business. She thinks that some additional finance will be required in the short term and plans to approach his bank for this. Mrs. Collins asks for your assistance in producing a cash budget for his new business for the next six months (i.e., January – June, 2021). She provides the following information: The business, which is to be called ‘Pink Lady Clothing’ will commence in January 2021.Non-current assets costing Gh₵ 10,000 will be bought in early January. These will be paid for immediately and are expected to have a five-year life, at the end of which they will be worthless.An initial stock (inventory) of goods costing Gh₵ 6,000 will be bought and paid for at the beginning of January.Mrs. Collins is estimating that the goods she expects to sell in January will be replaced by purchases made in January, and so on. The following are monthly sales forecast: January February March…arrow_forward
- 3. Frank decides he better make a budget! Use the following information to calculate his budget. Frank has net income of $45 000 a year. This table shows his expenses. Expense Amount Student loan payments $115/every 2 weeks Mortgage Insert from above Food $75/week Cell phone plan $69/month Utilities $40/every 2 weeks Car lease $305/month including maintenance) Gasoline $65 every 2 weeks on average Miscellaneous $125/every 2 weeks a) Use the data provided to design a monthly budget for Frank. Show your calculations and indicate whether each expense or income is fixed or variable. b) How much can Frank save in a 3-month period? Show your calculations. c) Is there something Frank is forgetting in his budget? What would you recommend for changes?arrow_forwardThis is Ben’s budget. Use his budget to determine the answer to the following question: Scenario: Suppose Ben wants to buy a house for $251,599. Calculate his 20% down payment for this home.arrow_forwardRead and analyze the situation below then answers the question given. Your mom asked your opinion if she will be joining the cooperative in her office. She wants to know the amount of money she will be receiving after 6 months and wanted to buy something in December. The cooperative wants her to contribute P1,000 per month beginning in June 2020 which will earn 3% compounded monthly. How much will be the future value of your mom's contribution at the end of December 2020? Tasks: You need to prepare a report showing a cash flow diagram on the total amount of money your mother will earn at the end of December. At the end of your report, write a conclusion stating your opinion to help your mom to decide.arrow_forward
- What is the amount of Laura’s monthly cash outflows if she chooses to rent the apartment by her herself? Use the rent amount for the one bedroom apartment to complete her budget?arrow_forwardThe Yeung family is using the Quantitative Reasoning Process to set up a monthy budget. They have a monthly income of $4,365. In July, their monthly expenses were $3,113, their monthly state and federal taxes totaled $778, and they contributed $230 to their savings plan. What was the Yeung's monthly cash flow for July? O $0 (Their income is exactly the same amount as they are spending and saving.) $244 (Their income is a little more than they are spending and saving.) O -$508 (Their income is a lot less than they are spending and saving. They are going into debt) $508 (Their income is a lot more than they are spending and saving.) -$244 (Their income is a little less than they are spending and saving. They are going into debt)arrow_forwardThis is Ben's budget. Use his budget to determine the answer to the following question: Scenario: Suppose Ben wants to buy a house for $251,599. For a 30-year mortgage, Ben gets a 5% interest rate. Calculate his monthly payments for this 30-year mortgage, after 20% down payment. Monthly Income Monthly Expenses ITEM V AMOUNT ITEM Column1 VAMOUNT Income Source 1 $2,000.00 Rent $800.00 Cell phone $100.00 Groceries $200.00 Car payment $273.00 Auto expenses $120.00 Student loans $250.00 Credit cards $100.00 Auto Insurance $78.00 Personal care $50.00 Entertainment $100.00 Miscellaneous $50.00arrow_forward
- This is Ben’s budget. Use his budget to determine the answer to the following question: Calculate the amount of income tax Ben owes monthly using the tax rate of 25%.arrow_forwardDirections: Answer the following questions. Provide necessary computations. 1. The Madrigal family is experiencing some financial pressures, even though the couple has a combined income of P1,236,000 per annum. Their home loan will start this year and their eldest daughter, Julieta, will start college in only three years. Alma is contemplating saving for this coming year and told her husband, Pedro, to plan for an emergency fund. Alma's monthly salary is P29,000. a) How much should be the three-month emergency funds of Alma? b) How much should be the three-month emergency funds of Pedro? c) If the couple decided to have five-month emergency funds, how much should be their combined emergency funds?arrow_forwardAngela's monthly disposable income is $1,749. She has monthly expenses of $1,548 (including recreational expenses of $219) and net cash flow of $201 per month. Angela analyzes her personal budget and decides that she can reduce her recreational spending by $48 per month. If Angela is saving $249 per month, what is her savings rate (i.e., savings as a percentage of disposable income)? Angela's savings rate is ___%. (Round to two decimal places.)arrow_forward
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